SkyWest Looking at Boeings

[atpcliff]

Hi!

I had read of rumours of Boeing personnel at SkyWest HQ, and that SW was looking at the 717 and 737.

A SkyWest employee said that SkyWest mgmt said in writing that they were considering buying the Boeings. The employee said SkyWest had a ton of cash, and if UAL went under, they were looking at stepping in on some of UAL's ex-routes.

Cliff
GRB

 

[General Lee]

That sounds logical, but what if United doesn't go Chap 7? If they try to compete anywhere near Delta, they will get the 6 month termination letter from Delta, and I am sure United would do the same. So then what? It does sound good, though.

Bye Bye--General Lee

 

[Wiskey Driver]

General, it would appear on the surface that if Delta were to terminate Skywests contract it would seriously impact Delta's ability to compete in todays market not to mention that Comair, ASA could come nowhere near filling the void for several years that Skywest would leave. What's your take on this??

WD.

 

[avratdwc]

Hey Wiskey,

Very good point, however dont waist your time with General. Alot pf people here are starting to overlook his statements since they are always the same.

That would actually be great for Skywest to drop Delta, you are 110% correct on your statement, they would drown.

 

[Splert]

If Delta does drop SkyWest, SkyWest’s name recognition is good enough to continue to feed SLC at-risk. I think.

However, don’t underestimate to power of fee-for-departure. Even at lower margins it is still a very powerful business plan to SkyWest’s BODs. It would very hard for SkyWest’s BODs to kiss-off this risk free rate-of-return.

Splert

 

[General Lee]

What? Nobody listens to me , right? Wrong---I get plenty of responses because I am right---and it scares you. Don't cry now.

Skywest and their routes could easily be taken within a six month termination notice. Six months is plenty of time to redirect ASA or Comair RJ's through SLC. Some of the other routes flown by E120's could be taken by Mesa DHC-8's---they know how to fly in the mountains---they fly into Aspen. I am sure they would do it for less, too. Hey, I like the Skywest product, but I wouldn't get cocky when you don't hold any of the cards. As far as Skywest going it alone---the feed to Orlando and Honolulu would cease to exist, and the loads would diminish. Yes, I am sure you could get connecting passengers that connect from Bozeman to SLC, and on to Ceder City. And, if Delta got desperate enough to fill some seats, they could get their own planes that used to fly the routes that you fly now. They used to fly 737-200's all over the West-----to all of the cities your RJ's fly now. I am sure they wouldn't abandon any routes for long---and then ASA/Comair RJ's would come to the rescue. Yeah, but I am wrong.

Bye Bye---General Lee

 

[Wiskey Driver]

General, I tend to think that it sounds much much easier that it really is and while I do believe that ASA and Comair would have to come in the fact still remains the lack of availble a/c. My thought is that the loss of Skywest would seriously hurt Delta at this point in the game because the other two Delta carriers don't have enough a/c to cover the routes they now serve and take over the SLC flying. You mentioned Mesa doing the SLC routes and while that is an option, Mesa would have to dump many of the markets it serves for AWA due to the conflict it would create thus further straining an already unstable relationship.

Now here is something you should really think about. USAIR is trying to sell a reservation system, if it were me I would buy it get the heads of Skywest, Air Wisconsin and ACA together form and alliance between all three to pick up all of the domestic flying of UAL in the event that they don't make it. Rekindle the shuttle on the west coast to compete with SWA with three to four RJ departures to their one and do the same between JFK, BOS and PHL on the east coast. All of the other markets are already served by the express carriers anyway and the need for an a/c past an RJ 90 is really unecessary because all of the feed is done internally. But hey what do I know, I'm just a dumb pilot who thinks he may know and understand the game...

WD.

 

[sleepy]

One problem at SLC for DAL is that Skywest owns it's own gates. I guess ASA/Comair could take over some DAL gates and operate out of them.

I would think that DCI could bring in Mesa fairly quickly to replace Skywest, ASA and Comair, they operate cheaper than all of us, and their management is pretty aggressive in trying to expand at the expense of the higher cost (i.e. higher paid) regional operators.

ASA's ability to expand is limited right now by our inability to take delivery of enough aircraft. The shift in production of the CR7 to a new facility will cause a several months delay in the delivery schedule. ASA may extend that delay until GE finds a fix for the CF34-8C1 (they are replacing 12 of our engins due to the loss of turbine blades, and GE has determined that the problem is a result of a design defect in the fuel nozzles, so this will effect all CR7 operators). Our President has said that we would take all of the RJ's we could get, we just can't get them fast enough. We are interviewing again, to build up the pool for something.

I know that ASA management is in a big hurry to complete our contract this year. They have hinted that something BIG is the works, but that it can't happen until the contract is complete. That something could be an expansion to the West, a new larger aircraft type (that came from our President too, so put your flames away), or it could just be BS to get us to finish the contract quickly and take less due to the current state of the airline industry (only to find that there is nothing BIG taking place).

I think that Skywest could quickly take a larger aircraft (there are 27 B-717's parked in the desert right now, probably a lot of B-737's as well), provide their own feed (they already have a network in place), and compete quite effectively with DAL and U in the West. I think that DAL could easily cover the Skywest flying out of SLC in less than six months time with ASA and Comair, or Chit and Mesa, or a combination of all four. Yes, this could all happen.

 

[acaTerry]

.

I think the General has a valid point. If the incentive is right, an airline can redirect and/or create a new market pretty quickly. Ask any senior Blue Ridger....Westair became ACA in what, 11 days back then? When MGT wants something to happen, they can make it happen.

 

[eaglefly]

Lack of available aircraft ?

The desert is LOADED with them and leasing companies would give the cheapest of rates.

Right now would be an excellent time to make such a move if UAL went under. Regionals could afford those larger A/C at VERY cheap rates.

 

[General Lee]

Hey, I am not saying that we would replace Skywest just like that in SLC----that is why there is a six month termination window. I also think the Skywest product is a good one. I'm just saying that if Skywest became "predatory" and started flying 717's etc that COMPETED with some of Delta's routes-----Delta wouldn't be happy about it. Doesn't that make sense?

Also, I don't really know if Skywest owns their gates at the SLC airport , or if the airport does. Regardless, if Skywest lost the feed contract with Delta, I bet they would sell the gates eventually.

There are a lot of things that could happen in the next six months to a year. Someone posted on another board that AA Eagle might not be happy with their CRJ70's, and maybe they would dump them for $$. Maybe they would go for the new EMB 70 seater now that Swiss Airlines has decided to postpone deliveries of the 20 or so that they were supposed to get this year----and EMB wants to sell them quick at a discount. (Almost same cockpit as the E145) There are a lot of things going on out there that we all have to look at when we are not flying---and I always do. You know why? To KEEP ALL OF YOU INFORMED. Thank you. Be sure to tip your waitresses---have a good night.

Bye Bye--General Lee

 

[sleepy]

The CR7 uses the same engine (CF34-8C1) that is used on the EMB-70 and EMB-90. If AMR is unhappy with the CR7 because of the engine problems, then it won't be any better with the EMB product. If they are unhappy with the Fuel AD (and I can't blame them) then I could see them getting rid of it. It is pretty clear to me that the CR7 should have never left the factory until all of it's problems were worked out. Sometimes I feel like a test pilot.

I have heard the same thing about AMR being unhappy with the CR7. I know that ASA has told BA to get it fixed, or we will find another aircraft.

 

[foofighter]

United and Delta are no longer guarantees for Skywest for many reasons. That being said, yes I think our management is considering EVERY option for future prosperity. However, keep in mind that Skywest management typically errors on the conservative side. If United were to go under, I don't think any moves would be made that would put a code share with Delta in jeopardy. So.......Do I think that Skywest is looking at operating bigger airplanes? You bet! Do I think we'll get em'? Only if it became CRYSTAL CLEAR that flying larger airplanes "at risk" is necessary for survival. Of course these are MY opinions only!

Later y'all

 

[~~~^~~~]

Skywest and their routes could easily be taken within a six month termination notice. Six months is plenty of time to redirect ASA or Comair RJ's through SLC. Bye Bye---General Lee

Six months is also plenty enough time to close an unprofitable hub. ASA could nt even backfill the loss of service at DFW if Skywest's flying got terminated.

Anyway, C2K is history. You guys are in negotiations. Not that I'm happy about it. We are also in negotiations and the house is coming off the jacks on our heads too.

Delta's announcement of anticipated losses this quarter and even weaker demand, on top of American's search for bankruptcy financing drove the stock price down almost 23% today. Delta has to act quickly, yet conservatively, to maintain cash. A rapid expansion to cover a mutually destructive threat from ALPA can't be a serious consideration.

I imagine if ALPA forced Skywest out over the operation of aircraft that violated your scope Delta would close SLC and Dallas might even make the endangered list. It would be impossible to justify a money losing hubs and hubs make more money with more feed. Hubs lose money with less feed, like boats in a sinking tide.

Just a guess....

 

[Gobi Gred]

I think Foofighter is %100 right in saying that while SkyWest may be entertaining the thought of bigger airplanes, they most likely will try and go the more conservative route of staying aligned with a major partner. The biggest problem with striking out on our own would be the enormous expense of setting up a reservation system as well as other costs such as advertising,etc. While I too like to entertain the thought of being on our own, in reality if we were to suddenly drop United and Delta, it would be a very scary few months at SkyWest. However, as other people have pointed out, anything is possible in this day and age!

 

[skyboat]

Sleepy-

My vote is managements desire to get a contract is not because of something big. Comair pilots were blamed for us not getting the job in LAX several years ago when Eagle was brought on because we wouldn't agree to a contract. If somrthing big is going to happen, Delta will do it and if there is uncertainty with ASA they will do it with Comair, Skywest, or some other carrier. I don't think Comair was ever in the LAX bid as we didn't even fly out West at the time. You don't just start an operation like that up overnight.

 

[General Lee]

Fins,

You know that stocks prices are functions of a market cap, and your company's worth can fluctuate big time day to day. IF there was a short war with Iraq, the stock price would climb straight up and Delta would be worth more instantly. Delta's cash position is better than most, and their operating expenses are fairly flat. We actually had an operating profit last quarter, but a loss resulted from the 1 time charges again. If the pilots give back some money (which I believe will happen to some extent)--it will help even more. Our planes have been jammed full lately--and even with a war the Spring Breakers going to Florida will halp us somewhat. I am not blind---I think the war will hurt ADVANCED bookings, but a SHORT WAR will help and low fares on the other end will result in full airplanes. You probably will see it going down to Panama City, Ft. Walton, and Daytona. The key is a relatively SHORT war----I'd say two weeks max. I do think our European flying this summer might be hurt by the France debacle, and maybe Germany too---but domestic travel may increase to Montana and Alaska for example. It will be interesting to say the least---especially if we do retire 400-600 pilots on May 1st alone.

Bye Bye--General Lee

 

[cocknbull]

I think that General Lee is right.

If Skywest's contract was terminated; Delta has alot of options. There are a couple of regionals with plenty of aircraft and money, and I'm sure they would love to expand or begin Delta service. I know that loosing Skywest will not result in the death of Delta.

Many regionals are getting sick of the majors determining their future and so am I. However those same majors had alot to do with all the money in the regionals banks. It's a big gamble going out on their own and accepting that risk, but I would like to see Skywest do it and succeed.

 

[CaptainBrazilia]

Boeings...

A bit of airline-industry wisdom...

Don't believe a single thing you hear until you see it sitting on the ramp in your company's colors! And THEN don't believe it until you're awarded a ground school class!

Rumors...bah.

 

[Jetlink]

The CR7 uses the same engine (CF34-8C1) that is used on the EMB-70 and EMB-90.

Where do you get this information??

Rolls Royce is making all the E135/145 engines, for us anyway